Tilburg, November 17th, 2019
During the presentation of Amparo Perez of FCC in Barcelona, the expression ‘end of waste’ came by. Remarkable and brave at the same time. Remarkable as we had just seen that FCC is sorting paper from a MRF, but brave also as it is basically impossible to come to an ‘end of waste’ status with paper sorted in a MRF. Obviously the constant dropping of the word ‘quality’ especially in the UK and by the Recycling Association must have brought up the idea that the end of waste status could be achieved with a MRF. Forget it. In a world of ever higher contamination requirements there is no chance that paper from a MRF is going to be generally accepted by regular paper mills. Let alone to get to end of waste. But perhaps we need to be ambitious and working on the impossible while at the same time we are trying to make the world believe that we are producing a better quality. That is far from reality. Not strange however. Often these kind of companies have little contact with end users themselves and rely on traders to sell their produce. Traders often look at the outside of the bales, but mills get the inside as well. In some countries, like in China up to the end of 2017, purchases were done purely on price. The contamination in it could be disposed of for next to nothing around the corner or in open water. Reason why China has stopped this. In the meantime we keep on polluting other countries with our MRF paper which only will result in them closing the borders as well. And the market ? Optimists will say that in the next 6 to 9 months we will have this depressed market but that thereafter recovery will come. If we say this often enough to one another, we might start believing it as well. We were told so in Barcelona, we heard it at the annual recycling conference in London. Encouraging would be the start of new capacities and the reduction of generation due to the low prices. Indeed, there are several regions in the world where ‘totters’ make an income by collecting waste paper and delivering it into the nearest processor. The story goes that these collectors would stop their activity and do something else. That might be true. However, our experience is different. For example in the U.K. totters are continuing to deliver in at a very low price as eventually after a short hesitation the bill is presented to sources where they collect from. These sources have little choice. They have to pay the collectors or put in in the general waste. Looking at the costs of putting it in the general waste, the choice is not difficult to make. Of course, in the U.S. and developing countries the situation is different. So it is there that we should need to find the reduction in generation. During the conference in Barcelona we heard that this year already 500.000 tonnes had gone to land fill in the U.S. To tackle the problem that only next year will occur in China when, as predicted, only 5 million tonnes will be imported compared to 12 million this year, we need however 15x that volume of 500.000 tonnes going to landfill. Eventually the problem will be solved, as it has been solved ever before. Many factors like more consumption of paper and board , less generation and alternative destinations like incineration and landfilling of low qualities (MRF paper) will bring balance in the market again. When ? In 6 to 9 months seems very optimistic looking at the China situation next year. The worst market in history was caused by legislation in Germany in 1988 that put a ban on landfilling waste paper. It took 3 years before the bottom of the prices was reached. Projecting it on today that could be in 2021. However now the oversupply caused by China is much bigger, we feel the oversupply much earlier and it could take much longer before we get out of it again. If so even 2022 or 2023 looks optimistic. Good is that the reality has entered the tender processes, anyway. Surprising enough bids have been honoured at prices that were half of those paid before. Sorting of household paper into news and pam is not viable anymore as the process has become very expensive due to the sharper quality requirenents and the very low price for card and board. The only solution therefore is: the purchase price needs to be lower.
Imports of recovered paper into China mounted to 10.3 million tons in the first 9 months of 2019. This was 5.2 million tons less than in the same period of 2018. Reduced imports were compensated to a lesser extend by more imports of recycled pulp (+235.000 tons - doubled compared to last year), but surprisingly imports of pulp were reduced by 493.460 tons in the first 4 months of 2019. In total imports of raw material for the paper and board industry went down by 2.293.000 tons in the period 1.1 – 30.4.2019, of which 493.460 tons of pulp for which no import license is needed. It shows that the (limited) import licenses for recovered paper are not the (only) problem for the paper and board industry.
In 2018 imported volumes of recovered paper in China went down 33.8% compared to 2017. In 2017 and 2016 also imported volumes went lower already compared to previous years with 9.8% and 2.7% respectively. The drop in 2018 could have been much worse if imports in the last Quarter would not have been increased by 34% compared to the same period of 2017. This was probably due to the active use of the yet available import licenses. And, the average price of imported recovered paper went up by $ 20 per ton compared to 2017. Next to mixed paper, that was not imported at all anymore, imports of all other grades dropped as well, like corrugated and kraft grades -14%, deinking grades -31% and high grades -17.1%. Furthermore it worked out that only Japan and other Asian countries last year exported more volumes to China, +9.8% = 244.000 tons and + 39.6% = 520.000 tons respectively. Against that, imports from the U.S.A. (-45.5%) and Europe (-38.1%) went down significantly. Imports from all other regions went down as well.
Price indications in Europe for low grades of recovered paper, sorted, baled and ex-works are now between € 20 and € 120 per ton. These prices are depending on quality, available volume, region and loaded weight.
Click here for the price chart, with prices of the last 10 years.
The price chart gives an indication of the price of mixed paper in the Netherlands free delivered mill over the last years. Scrolling over the top of the colums gives the exact price indication in Euro's per ton.
To view the price chart completely, please click and hold on the price chart after opening and move cursor to left or right to see all available years/months.